On Wed, 4 Oct 2000, Rakesh Bhandari (bhandari@Princeton.EDU) wrote: > As I noted to Paul C soon after you cut me off here, then > how do you make sense of the chapter on the production of > relative surplus value which is nothing but a study of the > implications of the declining unit value of wage goods, > thereby allowing a rising rate of exploitation. If this is > not an analysis in terms of a dynamic definition of > value--that is, in terms of a continuous decline in the > socially necessary labor time needed to reproduce wage > goods--then what would be? "Look at the first page of Chapter 12. Look at the little schematic diagram Marx uses to talk about the necessary labour time versus the surplus. He says, Consider a shortening of the necessary labour time from AB to AB': What are the consequences? Fine, he gives a good answer. This is comparative statics. A dynamic analysis of the same issue would ask: what are the consequences if d(necessary labour time)/dt < 0 ? I.e. what are the consequences for the time-derivatives of other variables of interest?" My first answer is the intensity of labor and the magnitude of overwork. The paradox is that the higher the rate of the reduction of socially necessary labor time, the greater the threat of moral depreciation, and the more overworked and exploited the proletariat is. Why this was so baffled that molehill on the flat plains of bourgeois thought. With the endogenization of science and technology, the second derivative could be positive, right? If not, forget it. ""Further on in the chapter we also have an analysis that runs in terms of discrete changes. "Now let some capitalist contrive to double the productivity of labour...". And so on". Marx is certainly talking about change. He's not doing dynamics as such." disagree. Just think about marx's paean to the bourgeoisie's continuous revolutionisation of the productive forces as early as the CM. Marx left Prodhoun behind because by studying Ure and Babbage, he understood his epoch. Do you really think this chap would have wanted to work within the framework of comparative statics? "On the matter that came up earlier: > Let me make a simple logical point--that the inputs have to > be transformed into prices of production (remember we do > agree on this) does not mean that they have to be > transformed into the same set of prices of production as the > outputs. But Marx is talking (we're now looking at vol. 3, ch. 9) about a hypothetical equilibrium state in which the rate of profit is equalized for all capitals. " Agreed. " There's simply no (temporal) change going on in the main argument of this chapter." Marx's main point indeed is not to show how one set of input prices at t changes into another t+1. I agree that the main point of the exercise is not a dynamic price theory. What the input prices are at t and output prices are at t+1 is hardly of any interest to Marx. He is not a bourgeois microeconomist. So the mistake you are making here is thinking that Marx wants to derive the prices at t+1 via a determination of the average rate of profit. But Marx's main concern is not price determination. It is to solve a major problem which bedeviled Ricardian value theory. While the law of the average profit stipulates that the magnitude of profit is absolutely independent from the share of capital spent on wages and transformed into the live labor of the wage worker, the universal law of value states directly that new value can only be the product of live labor. Ricardo tried to dismiss this as an exception to the rule, but Marx considered MALTHUS' criticism correct: the more industry develops, the rule becomes an exception and the exception becomes a rule. Just as Marx turned the Lockean defense of property on its head, here he attempts to turn Malthus' criticism on its head by showing that the more industry develops, the more the average rate of profit becomes the form in which the law of value asserts itself. In short, I am not arguing that time subscripted prices are the main focus of this chapter. I am suggesting that if one simply does not adopt the stricture that input prices=output prices, Marx's brilliant reversal of the Malthus critique easily goes through. " Marx wants to say something about the relationship between these states." the something he wants to say is noted above. " To get at the essence he's ready to entertain strong simplifying assumptions (first page of the chapter)." Annual and identical turnover and D=S. But he does not say that he is working on the assumption of constant values since in this chapter he is exploring why prices of production change. Plus, he does relax the annual turnover of capital in a matter of a few paragraphs. "Dynamic stuff is off the agenda for the moment. When we get past the main transformation argument we get a whiff of dynamics: "In spite of the great changes occurring continually, as we shall see, in the actual rates of profit within the individual spheres of production..." Note: "as we shall see": this will come later, it's not germane to the transformation argument as such." Notice that you didn't give the page numbers here. Why? Simply because Marx here is assigning a wholly different validity to the Ricardian law of value than you and Paul C do. That is, Marx only grants the approximate validity of the Ricardian law of value in understanding the changes in relative prices over time due to technical change. Since the average rate of profit is formed and changes only slowly, it's a good approximation to relate changing relative prices to underlying changes in values. So in terms of your claims, Marx is not saying that price in any snapshot of time is determined by value (there's that mediation of the average rate of profit after all) but rather that changes in relative prices over time can on good approximation be accounted for by changes in the underlying values of the commodities in their natural units. BUT just because the average rate of profit changes slowly (is off the agenda as you put it) does not mean that prices of production are not changing in relative and absolute terms due to technical change. And it does not mean that Marx is not allowing for and expecting prices of production of the inputs to differ from the prices of production of the outputs, assuming of course you have the same commodity mix on both sides. So in no way do these passages serve as justification for the stricture under question, but they indicate that the validity which marx granted the Ricardian law of value is different than you would have it. "In the given theoretical context, then, a difference between input and output prices for a given commodity can only be a symptom of an incomplete analysis." 1."Then"?? did I miss the proof, argument here? 2. Note that you have said incomplete, not logically incorrect, as Ajit does. That is, you seem to be agreeing that Marx was correct not to have the inputs in the second tableau in prices of production because the very category is not derived until the completion of the tableau. 3. We seem to be both agreeing that there could be a third tableau, but as I shall point out, such a tableau is not needed for Marx to complete his reversal of the Malthus critique. Which is to say Marx could now concoct a third tableau in which the cost price is no longer equal to c+v. He could concoct the numbers for this new column either on the assumption that means of pro sold above and wage goods below value in the previous period or vice versa. It simply does not matter because the average rate of profit will still be determined in the same way on the basis of the law of value--and this is the main point of Marx's argument, not dynamic price theory indeed--though the output prices of production and average rate of profit will be different than in the second tableau. However in this hyothetical third tableau total value will equal total price, total profit equal total surplus value. 4. What you seem be saying is that the only way to modify the cost prices in a non arbitrary way is to do so on the basis that prices of production are the same for the inputs as the outputs--that is, to determine the prices of production of the inputs on the basis of the IDENTICAL data as the outputs, thereby creating a replicating system as if the economy were a crystal. This seems reasonable to you; this seems absurd to me. And I will repeat again, we don't need at all to know what the cost prices were to see how Marx is showing that instead of modifying or contradicting the law of value, the average rate of profit can become the form in which the law of value asserts itself. " It has nothing to do with dynamics, because no dynamics have been posited or specified. What is it that is supposed to be "changing" that accounts for any such difference? " We are only working on the assumption that the I-O matrix in the previous period from which the inputs came is not identical to this one by which the outputs will be produced. There are a million reasons why we can expect inter-periodic change. What is supposed to be constant that does not allow for any change? " The only thing that is "changing" is the distribution of profit (surplus value) between capitals, but that is not a change _in time_, it's an atemporal hypothetical comparison." Yes indeed, it's an atemporal hypothetical comparison of what the outputs would have sold at in value and price of production terms. As the outputs search for these two respective points, we are indeed holding everything else constant. But this in no way means that we have to assume fantastically that the point towards which the output is groping in terms of prices of production is the IDENTICAL point at which the inputs were bought. It seems perverse to me to call for the discarding of Marx's value theory on the grounds that he did not make such a ridiculous assumption. All the best, Rakesh
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